Republic of the Philippines

Supreme Court
Manila


SECOND DIVISION


MILA A. REYES ,
Petitioner,




- versus -





VICTORIA T. TUPARAN,
Respondent.
G.R. No. 188064

Present:

CARPIO, J., Chairperson,
AC!"RA,
P#RA$%A,
A&A', and
M#'O(A, JJ.


Promul)ated:
*une +, ,-++

. -----------------------------------------------------------------------------------------------------.

D E C I S I O N

MENDOZA, J.:



Sub/ect of this petition for revie0 is the 1ebruar2 +3, ,--4 'ecision
+
5+6 of the Court of Appeals (CA) 0hich
affirmed 0ith modification the 1ebruar2 ,,, ,--7 'ecision
,
5,6 of the Re)ional %rial Court, &ranch +8,, 9alen:uela
Cit2 (RTC), in Civil Case o. 34;<-9-4,, an action for Rescission of Contract 0ith 'ama)es.

On September +-, +44,, Mila A. Re2es (petitioner) filed a complaint for Rescission of Contract 0ith 'ama)es
a)ainst 9ictoria %. %uparan (respondent) before the R%C. In her Complaint, petitioner alle)ed, amon) others, that she
0as the re)istered o0ner of a +,,8; s=uare meter residential and commercial lot located in >aruhatan, 9alen:uela
Cit2, and covered b2 %C% o. 9-;+3-? that on that propert2, she put up a three-store2 commercial buildin) @no0n as
R&* &uildin) and a residential apartment buildin)? that since +44-, she had been operatin) a dru)store and cosmetics
store on the )round floor of R&* &uildin) 0here she also had been residin) 0hile the other areas of the buildin)s
includin) the side0al@s 0ere bein) leased and occupied b2 tenants and street vendors.

In 'ecember +4A4, respondent leased from petitioner a space on the )round floor of the R&* &uildin) for her
pa0nshop business for a monthl2 rental of ;,---.--. A close friendship developed bet0een the t0o 0hich led to the
respondent investin) thousands of pesos in petitionerBs financin)Clendin) business from 1ebruar2 8, +44- to Ma2 ,8,
+44-, 0ith interest at the rate of 7D a month.
+5+6 Rollo, pp. 8,-+-,? penned b2 Associate *ustice Celia C. $ibrea-$ea)o)o and concurred in b2 Associate *ustice
*uan E. #nri=ue:, *r. and Associate *ustice ormandie &. Pi:arro.
,5,6 Id. at +;8-+7,.

On *une ,-, +4AA, petitioner mort)a)ed the sub/ect real properties to the 1armers Savin)s &an@ and $oan
&an@, Inc. (FSL Bank) to secure a loan of ,,---,---.-- pa2able in installments. On ovember +<, +44-, petitionerBs
outstandin) account on the mort)a)e reached ,,,8A,-8A.+3. Petitioner then decided to sell her real properties for at
least 7,<--,---.-- so she could li=uidate her ban@ loan and finance her businesses. As a )esture of friendship,
respondent verball2 offered to conditionall2 bu2 petitionerBs real properties for ;,,--,---.-- pa2able on installment
basis 0ithout interest and to assume the ban@ loan. %o induce the petitioner to accept her offer, respondent offered the
follo0in) conditionsCconcessions:



+. %hat the conditional sale 0ill be cancelled if the plaintiff FpetitionerG can find a bu2er of said
properties for the amount of 7,<--,---.-- 0ithin the neHt three F3G months provided all amounts
received b2 the plaintiff from the defendant FrespondentG includin) pa2ments actuall2 made b2
defendant to 1armers Savin)s and $oan &an@ 0ould be refunded to the defendant 0ith additional
interest of siH F7DG monthl2?

,. %hat the plaintiff 0ould continue usin) the space occupied b2 her and dru)store and
cosmetics store 0ithout an2 rentals for the duration of the installment pa2ments?

3. %hat there 0ill be a lease for fifteen F+<G 2ears in favor of the plaintiff over the space for
dru)store and cosmetics store at a monthl2 rental of onl2 A,---.-- after full pa2ment of the stipulated
installment pa2ments are made b2 the defendant?

;. %hat the defendant 0ill underta@e the rene0al and pa2ment of the fire insurance policies on
the t0o F,G sub/ect buildin)s follo0in) the eHpiration of the then eHistin) fire insurance polic2 of the
plaintiff up to the time that plaintiff is full2 paid of the total purchase price of ;,,--,---.--.
3
536

After petitionerBs verbal acceptance of all the conditionsCconcessions, both parties 0or@ed to)ether to obtain
1S$ &an@Bs approval for respondent to assume her FpetitionerBsG outstandin) ban@ account. %he assumption 0ould be
part of respondentBs purchase price for petitionerBs mort)a)ed real properties. 1S$ &an@ approved their proposal on
the condition that petitioner 0ould si)n or remain as co-ma@er for the mort)a)e obli)ation assumed b2 respondent.

On ovember ,7, +44-, the parties and 1S$ &an@ eHecuted the correspondin) 'eed of Conditional Sale of
Real Properties 0ith Assumption of Mort)a)e. 'ue to their close personal friendship and business relationship, both
parties chose not to reduce into 0ritin) the other terms of their a)reement mentioned in para)raph ++ of the
complaint. &esides, 1S$ &an@ did not 0ant to incorporate in the 'eed of Conditional Sale of Real Properties 0ith
Assumption of Mort)a)e an2 other side a)reement bet0een petitioner and respondent.

"nder the 'eed of Conditional Sale of Real Properties 0ith Assumption of Mort)a)e, respondent 0as bound
to pa2 the petitioner a lump sum of +., million pesos 0ithout interest as part of the purchase price in three F3G fiHed
installments as follo0s:

aG ,--,---.-- I due *anuar2 3+, +44+
bG ,--,---.-- I due *une 3-, +44+
cG A--,---.-- I due 'ecember 3+, +44+

Respondent, ho0ever, defaulted in the pa2ment of her obli)ations on their due dates. Instead of pa2in) the
amounts due in lump sum on their respective maturit2 dates, respondent paid petitioner in small amounts from time to
time. %o compensate for her dela2ed pa2ments, respondent a)reed to pa2 petitioner an interest of 7D a month. As of
Au)ust 3+, +44,, respondent had onl2 paid 34<,---.--, leavin) a balance of A-<,---.-- as principal on the unpaid
installments and ;77,A43.,< as unpaid accumulated interest.
3536 Para)raph ++ of the Complaint, id. at +87.

Petitioner further averred that despite her success in findin) a prospective bu2er for the sub/ect real properties
0ithin the 3-month period a)reed upon, respondent rene)ed on her promise to allo0 the cancellation of their deed of
conditional sale. Instead, respondent became interested in o0nin) the sub/ect real properties and even 0anted to
convert the entire propert2 into a modern commercial compleH. onetheless, she consented because respondent
repeatedl2 professed friendship and assured her that all their verbal side a)reement 0ould be honored as sho0n b2 the
fact that since 'ecember +44-, she FrespondentG had not collected an2 rentals from the petitioner for the space
occupied b2 her dru)store and cosmetics store.

On March +4, +44,, the residential buildin) 0as )utted b2 fire 0hich caused the petitioner to lose rental
income in the amount of A,---.-- a month since April +44,. Respondent ne)lected to rene0 the fire insurance
polic2 on the sub/ect buildin)s.

Since 'ecember +44-, respondent had ta@en possession of the sub/ect real properties and had been
continuousl2 collectin) and receivin) monthl2 rental income from the tenants of the buildin)s and vendors of the
side0al@ frontin) the R&* buildin) 0ithout sharin) it 0ith petitioner.

On September ,, +44,, respondent offered the amount of 8<+,---.-- onl2 pa2able on September 8, +44,, as
full pa2ment of the purchase price of the sub/ect real properties and demanded the simultaneous eHecution of the
correspondin) deed of absolute sale.

Responden!s Ans"e#

Respondent countered, amon) others, that the tripartite a)reement erroneousl2 desi)nated b2 the petitioner as
a 'eed of Conditional Sale of Real Propert2 0ith Assumption of Mort)a)e 0as actuall2 a pure and absolute contract
of sale 0ith a term period. It could not be considered a conditional sale because the ac=uisition of contractual ri)hts
and the performance of the obli)ation therein did not depend upon a future and uncertain event. Moreover, the capital
)ains and documentar2 stamps and other miscellaneous eHpenses and real estate taHes up to +44- 0ere supposed to be
paid b2 petitioner but she failed to do so.

Respondent further averred that she successfull2 rescued the properties from a definite foreclosure b2 pa2in)
the assumed mort)a)e in the amount of ,,,8A,-8A.+3 plus interest and other finance char)es. &ecause of her
pa2ment, she 0as able to obtain a deed of cancellation of mort)a)e and secure a release of mort)a)e on the sub/ect
real properties includin) petitionerBs ancestral residential propert2 in Sta. Maria, &ulacan.

PetitionerBs claim for the balance of the purchase price of the sub/ect real properties 0as baseless and
un0arranted because the full amount of the purchase price had alread2 been paid, as she did pa2 more than
;,,--,---.--, the a)reed purchase price of the sub/ect real properties, and she had even introduced improvements
thereon 0orth more than ;,A--,---.--. As the parties could no lon)er be restored to their ori)inal positions,
rescission could not be resorted to.

Respondent added that as a result of their business relationship, petitioner 0as able to obtain from her a loan in
the amount of ;--,---.-- 0ith interest and too@ several pieces of /e0elr2 0orth +,-,---.--. Petitioner also failed
and refused to pa2 the monthl2 rental of ,-,---.-- since ovember +7, +44- up to the present for the use and
occupanc2 of the )round floor of the buildin) on the sub/ect real propert2, thus, accumulatin) arreara)es in the
amount of ;8-,---.-- as of October +44,.

R$%&n' o( )e RTC

On 1ebruar2 ,,, ,--7, the R%C handed do0n its decision findin) that respondent failed to pa2 in full the ;.,
million total purchase price of the sub/ect real properties leavin) a balance of A-<,---.--. It stated that the chec@s
and receipts presented b2 respondent refer to her pa2ments of the mort)a)e obli)ation 0ith 1S$ &an@ and not the
pa2ment of the balance of +,,--,---.--. %he R%C also considered the 'eed of Conditional Sale of Real Propert2
0ith Assumption of Mort)a)e eHecuted b2 and amon) the t0o parties and 1S$ &an@ a contract to sell, and not a
contract of sale. It 0as of the opinion that althou)h the petitioner 0as entitled to a rescission of the contract, it could
not be permitted because her non-pa2ment in full of the purchase price Jma2 not be considered as substantial and
fundamental breach of the contract as to defeat the ob/ect of the parties in enterin) into the contract.K
;
5;6 %he R%C
believed that the respondentBs offer stated in her counselBs letter dated September ,, +44, to settle 0hat she thou)ht
0as her unpaid balance of 8<+,---.-- sho0ed her sincerit2 and 0illin)ness to settle her obli)ation. !ence, it 0ould
be more e=uitable to )ive respondent a chance to pa2 the balance plus interest 0ithin a )iven period of time.

1inall2, the R%C stated that there 0as no factual or le)al basis to a0ard dama)es and attorne2Bs fees because
there 0as no proof that either part2 acted fraudulentl2 or in bad faith.

%hus, the dispositive portion of the R%C 'ecision reads:

WHEREFORE, judgment is hereby rendered as follows:

1. Allowing the defendant to ay the laintiff within thirty !"#$ days from the finality
hereof the amount of %#&,###.##, reresenting the unaid ur'hase ri'e of the subje't
roerty, with interest thereon at () a month from *anuary 1, 1++( until fully aid. Failure of
the defendant to ay said amount within the said eriod shall 'ause the automati' res'ission
of the 'ontra't !,eed of -onditional .ale of Real /roerty with Assumtion of 0ortgage$ and
the laintiff and the defendant shall be restored to their former ositions relati1e to the
subje't roerty with ea'h returning to the other whate1er benefits ea'h deri1ed from the
transa'tion2

(. ,ire'ting the defendant to allow the laintiff to 'ontinue using the sa'e o''uied by
her for drugstore and 'osmeti' store without any rental ending ayment of the aforesaid
balan'e of the ur'hase ri'e.

". Ordering the defendant, uon her full ayment of the ur'hase ri'e together with
interest, to e3e'ute a 'ontra't of lease for fifteen !1&$ years in fa1or of the laintiff o1er the
sa'e for the drugstore and 'osmeti' store at a fi3ed monthly rental of %,###.##2 and




4. ,ire'ting the laintiff, uon full ayment to her by the defendant of the ur'hase
ri'e together with interest, to e3e'ute the ne'essary deed of sale, as well as to ay the -aital
5ains 6a3, do'umentary stams and other mis'ellaneous e3enses ne'essary for se'uring the
78R -learan'e, and to ay the real estate ta3es due on the subje't roerty u to 1++#, all
ne'essary to transfer ownershi of the subje't roerty to the defendant.

9o ronoun'ement as to damages, attorney:s fees and 'osts.

.O OR,ERE,.
&
;&<

R$%&n' o( )e CA

On 1ebruar2 +3, ,--4, the CA rendered its decision affirmin) 0ith modification the R%C 'ecision. %he CA
a)reed 0ith the R%C that the contract entered into b2 the parties is a contract to sell but ruled that the remed2 of
rescission could not appl2 because the respondentBs failure to pa2 the petitioner the balance of the purchase price in
the total amount of A-<,---.-- 0as not a breach of contract, but merel2 an event that prevented the seller
FpetitionerG from conve2in) title to the purchaser FrespondentG. It reasoned that out of the total purchase price of the
;5;6 Id. at +7-.
<5<6 Id. at +7,.
sub/ect propert2 in the amount of ;,,--,---.--, respondentBs remainin) unpaid balance 0as onl2 A-<,---.--.
Since respondent had alread2 paid a substantial amount of the purchase price, it 0as but ri)ht and /ust to allo0 her to
pa2 the unpaid balance of the purchase price plus interest. %hus, the decretal portion of the CA 'ecision reads:

WHEREFORE, remises 'onsidered, the ,e'ision dated (( February (##= and
Order dated (( ,e'ember (##= of the Regional 6rial -ourt of >alen?uela -ity, 7ran'h 1@( in
-i1il -ase 9o. "+4&A>A+( are AFF8R0E, with 0O,8F8-A68O9 in that defendantAaellant
>i'toria 6. 6uaran is hereby OR,ERE, to ay laintiffAaelleeBaellant 0ila A. Reyes,
within "# days from finality of this ,e'ision, the amount of %#&,###.## reresenting the
unaid balan'e of the ur'hase ri'e of the subje't roerty, lus interest thereon at the rate
of =) er annum from 11 .etember 1++( u to finality of this ,e'ision and, thereafter, at the
rate of 1() er annum until full ayment. 6he ruling of the trial 'ourt on the automati'
res'ission of the ,eed of -onditional .ale with Assumtion of 0ortgage is hereby ,ECE6E,.
.ubje't to the foregoing, the disositi1e ortion of the trial 'ourt:s de'ision is AFF8R0E, in
all other rese'ts.

.O OR,ERE,.
=
;=<

After the denial of petitionerBs motion for reconsideration and respondentBs motion for partial reconsideration,
petitioner filed the sub/ect petition for revie0 pra2in) for the reversal and settin) aside of the CA 'ecision anchored
on the follo0in)

ASSIGNMENT O* ERRORS


A. T+E COURT O* APPEALS SERIOUSLY ERRED AND A,USED ITS
DISCRETION IN DISALLO-ING T+E OUTRIG+T RESCISSION O* T+E SU,.ECT
DEED O* CONDITIONAL SALE O* REAL PROPERTIES -IT+ ASSUMPTION O*
MORTGAGE ON T+E GROUND T+AT RESPONDENT TUPARAN!S *AILURE TO PAY
PETITIONER REYES T+E ,ALANCE O* T+E PURC+ASE PRICE O* 80/,000.00 IS NOT
A ,REAC+ O* CONTRACT DESPITE ITS O-N *INDINGS T+AT PETITIONER STILL
RETAINS O-NERS+IP AND TITLE OVER T+E SU,.ECT REAL PROPERTIES DUE TO
RESPONDENT!S RE*USAL TO PAY T+E ,ALANCE O* T+E TOTAL PURC+ASE PRICE
O* 80/,000.00 -+IC+ IS E0UAL TO 102 O* T+E TOTAL PURC+ASE PRICE O*
4,100,000.00 OR 662 O* T+E STIPULATED LAST INSTALLMENT O* 1,100,000.00
PLUS T+E INTEREST T+EREON. IN E**ECT, T+E COURT O* APPEALS A**IRMED
AND ADOPTED T+E TRIAL COURT!S CONCLUSION T+AT T+E RESPONDENT!S NON3
PAYMENT O* T+E 80/,000.00 IS ONLY A SLIG+T OR CASUAL ,REAC+ O*
CONTRACT.


,. T+E COURT O* APPEALS SERIOUSLY ERRED AND A,USED ITS
DISCRETION IN DISREGARDING AS GROUND *OR T+E RESCISSION O* T+E
SU,.ECT CONTRACT T+E OT+ER *RAUDULENT AND MALICIOUS ACTS
COMMITTED ,Y T+E RESPONDENT AGAINST T+E PETITIONER -+IC+ ,Y
T+EMSELVES SU**ICIENTLY .USTI*Y A DENIAL O* A GRACE PERIOD O* T+IRTY
4506 DAYS TO T+E RESPONDENT -IT+IN -+IC+ TO PAY TO T+E PETITIONER T+E
80/,000.00 PLUS INTEREST T+EREON.


C. EVEN ASSUMING ARGUENDO T+AT PETITIONER IS NOT ENTITLED TO
T+E RESCISSION O* T+E SU,.ECT CONTRACT, T+E COURT O* APPEALS STILL
7576 Id. at +-+-+-,.
SERIOUSLY ERRED AND A,USED ITS DISCRETION IN REDUCING T+E INTEREST ON
T+E 80/,000.00 TO ONLY 762 PER ANNUM STARTING *ROM T+E DATE O* *ILING
O* T+E COMPLAINT ON SEPTEM,ER 11, 18819 DESPITE T+E PERSONAL
COMMITMENT O* T+E RESPONDENT AND AGREEMENT ,ET-EEN T+E PARTIES
T+AT RESPONDENT -ILL PAY INTEREST ON T+E 80/,000.00 AT T+E RATE O* 62
MONT+LY STARTING T+E DATE O* DELIN0UENCY ON DECEM,ER 51, 1881.


D. T+E COURT O* APPEALS SERIOUSLY ERRED AND A,USED ITS
DISCRETION IN T+E APPRECIATION AND:OR MISAPPRECIATION O* *ACTS
RESULTING INTO T+E DENIAL O* T+E CLAIM O* PETITIONER REYES *OR ACTUAL
DAMAGES -+IC+ CORRESPOND TO T+E MILLIONS O* PESOS O* RENTALS:*RUITS
O* T+E SU,.ECT REAL PROPERTIES -+IC+ RESPONDENT TUPARAN COLLECTED
CONTINUOUSLY SINCE DECEM,ER 1880, EVEN -IT+ T+E UNPAID ,ALANCE O*
80/,000.00 AND DESPITE T+E *ACT T+AT RESPONDENT DID NOT CONTROVERT
SUC+ CLAIM O* T+E PETITIONER AS CONTAINED IN +ER AMENDED COMPLAINT
DATED APRIL 11, 1006.


E. T+E COURT O* APPEALS SERIOUSLY ERRED AND A,USED ITS
DISCRETION IN T+E APPRECIATION O* *ACTS RESULTING INTO T+E DENIAL O*
T+E CLAIM O* PETITIONER REYES *OR T+E 18,608.00 ,AC; RENTALS T+AT
-ERE COLLECTED ,Y RESPONDENT TUPARAN *ROM T+E OLD TENANTS O* T+E
PETITIONER.


*. T+E COURT O* APPEALS SERIOUSLY ERRED AND A,USED ITS
DISCRETION IN DENYING T+E PETITIONER!S EARLIER 7URGENT MOTION *OR
ISSUANCE O* A PRELIMINARY MANDATORY AND PRO+I,ITORY IN.UNCTION9
DATED .ULY <, 1008 AND T+E 7SUPPLEMENT9 T+ERETO DATED AUGUST 4, 1008
T+ERE,Y CONDONING T+E UN.USTI*IA,LE *AILURE:RE*USAL O* .UDGE *LORO
ALE.O TO RESOLVE -IT+IN ELEVEN 4116 YEARS T+E PETITIONER!S T+REE 456
SEPARATE 7MOTIONS *OR PRELIMINARY IN.UNCTION: TEMPORARY
RESTRAINING ORDER, ACCOUNTING AND DEPOSIT O* RENTAL INCOME9 DATED
MARC+ 1<, 188/, AUGUST 18, 1886 AND .ANUARY <, 1006 T+ERE,Y PERMITTING T+E
RESPONDENT TO UN.USTLY ENRIC+ +ERSEL* ,Y CONTINUOUSLY COLLECTING
ALL T+E RENTALS:*RUITS O* T+E SU,.ECT REAL PROPERTIES -IT+OUT ANY
ACCOUNTING AND COURT DEPOSIT O* T+E COLLECTED RENTALS:*RUITS AND
T+E PETITIONERS 7URGENT MOTION TO DIRECT DE*ENDANT VICTORIA TUPARAN
TO PAY T+E ACCUMULATED UNPAID REAL ESTATE TA=ES AND SE* TA=ES ON T+E
SU,.ECT REAL PROPERTIES9 DATED .ANUARY 15, 100< T+ERE,Y E=POSING T+E
SU,.ECT REAL PROPERTIES TO IMMINENT AUCTION SALE ,Y T+E CITY
TREASURER O* VALEN>UELA CITY.


G. T+E COURT O* APPEALS SERIOUSLY ERRED AND A,USED ITS
DISCRETION IN DENYING T+E PETITIONER!S CLAIM *OR MORAL AND
E=EMPLARY DAMAGES AND ATTORNEY!S *EES AGAINST T+E RESPONDENT.

In sum, the crucial issue that needs to be resolved is 0hether or not the CA 0as correct in rulin) that there 0as
no le)al basis for the rescission of the 'eed of Conditional Sale 0ith Assumption of Mort)a)e.

Pos&&on o( )e Pe&&one#

%he petitioner basicall2 ar)ues that the CA should have )ranted the rescission of the sub/ect 'eed of
Conditional Sale of Real Properties 0ith Assumption of Mort)a)e for the follo0in) reasons:

+. %he sub/ect deed of conditional sale is a reciprocal obli)ation 0hose outstandin)
characteristic is reciprocit2 arisin) from identit2 of cause b2 virtue of 0hich one obli)ation is
correlative of the other.

,. %he petitioner 0as rescindin) I not enforcin) I the sub/ect 'eed of Conditional Sale
pursuant to Article ++4+ of the Civil Code because of the respondentBs failureCrefusal to pa2 the
A-<,---.-- balance of the total purchase price of the petitionerBs properties 0ithin the stipulated
period endin) 'ecember 3+, +44+.

3. %here 0as no sli)ht or casual breach on the part of the respondent because she FrespondentG
deliberatel2 failed to compl2 0ith her contractual obli)ations 0ith the petitioner b2 violatin) the terms
or manner of pa2ment of the +,,--,---.-- balance and un/ustl2 enriched herself at the eHpense of the
petitioner b2 collectin) all rental pa2ments for her personal benefit and en/o2ment.

1urthermore, the petitioner claims that the respondent is liable to pa2 interest at the rate of 7D per month on
her unpaid installment of A-<,---.-- from the date of the delin=uenc2, 'ecember 3+, +44+, because she obli)ated
herself to do so.
1inall2, the petitioner asserts that her claim for dama)es or lost income as 0ell as for the bac@ rentals in the
amount of ,4,7-4.-- has been full2 substantiated and, therefore, should have been )ranted b2 the CA. !er claim for
moral and eHemplar2 dama)es and attorne2Bs fees has been li@e0ise substantiated.

Pos&&on o( )e Responden

%he respondent counters that the sub/ect 'eed of Conditional Sale 0ith Assumption of Mort)a)e entered into
bet0een the parties is a contract to sell and not a contract of sale because the title of the sub/ect properties still
remains 0ith the petitioner as she failed to pa2 the installment pa2ments in accordance 0ith their a)reement.

Respondent echoes the R%C position that her inabilit2 to pa2 the full balance on the purchase price ma2 not be
considered as a substantial and fundamental breach of the sub/ect contract and it 0ould be more e=uitable if she
0ould be allo0ed to pa2 the balance includin) interest 0ithin a certain period of time. She claims that as earl2 as
+44,, she has sho0n her sincerit2 b2 offerin) to pa2 a certain amount 0hich 0as, ho0ever, re/ected b2 the petitioner.

1inall2, respondent states that the sub/ect deed of conditional sale eHplicitl2 provides that the installment
pa2ments shall not bear an2 interest. Moreover, petitioner failed to prove that she 0as entitled to bac@ rentals.
T)e Co$#!s R$%&n'


%he petition lac@s merit.

%he Court a)rees 0ith the rulin) of the courts belo0 that the sub/ect 'eed of Conditional Sale 0ith
Assumption of Mort)a)e entered into b2 and amon) the t0o parties and 1S$ &an@ on ovember ,7, +44- is a
contract to sell and not a contract of sale. %he sub/ect contract 0as correctl2 classified as a contract to sell based on
the follo0in) pertinent stipulations:

%. 6hat the title and ownershi of the subje't real roerties shall remain with the First
/arty until the full ayment of the .e'ond /arty of the balan'e of the ur'hase ri'e and
liDuidation of the mortgage obligation of (,###,###.##. /ending ayment of the balan'e of
the ur'hase ri'e and liDuidation of the mortgage obligation that was assumed by the
.e'ond /arty, the .e'ond /arty shall not sell, transfer and 'on1ey and otherwise en'umber
the subje't real roerties without the written 'onsent of the First and 6hird /arty.

+. 6hat uon full ayment by the .e'ond /arty of the full balan'e of the ur'hase ri'e
and the assumed mortgage obligation herein mentioned the 6hird /arty shall issue the
'orresonding ,eed of -an'ellation of 0ortgage and the First /arty shall e3e'ute the
'orresonding ,eed of Absolute .ale in fa1or of the .e'ond /arty.
@
;@<

&ased on the above provisions, the title and o0nership of the sub/ect properties remains 0ith the petitioner
until the respondent full2 pa2s the balance of the purchase price and the assumed mort)a)e obli)ation. %hereafter,
1S$ &an@ shall then issue the correspondin) deed of cancellation of mort)a)e and the petitioner shall eHecute the
correspondin) deed of absolute sale in favor of the respondent.

Accordin)l2, the petitionerBs obli)ation to sell the sub/ect properties becomes demandable onl2 upon the
happenin) of the positive suspensive condition, 0hich is the respondentBs full pa2ment of the purchase price. Lithout
respondentBs full pa2ment, there can be no breach of contract to spea@ of because petitioner has no obli)ation 2et to
turn over the title. RespondentBs failure to pa2 in full the purchase price is not the breach of contract contemplated
under Article ++4+ of the e0 Civil Code but rather /ust an event that prevents the petitioner from bein) bound to
conve2 title to the respondent. %he ,--4 case of Nabus v. Joauin ! Julia "a#son
A
5A6 is enli)htenin):

6he -ourt holds that the 'ontra't entered into by the .ouses 9abus and resondents
was a 'ontra't to sell, not a 'ontra't of sale.

A 'ontra't of sale is defined in Arti'le 14&% of the -i1il -ode, thus:

Art. 14&%. 7y the 'ontra't of sale, one of the 'ontra'ting arties obligates himself to
transfer the ownershi of and to deli1er a determinate thing, and the other to ay therefor a
ri'e 'ertain in money or its eDui1alent.

333

.ale, by its 1ery nature, is a 'onsensual 'ontra't be'ause it is erfe'ted by mere
'onsent. 6he essential elements of a 'ontra't of sale are the following:

a$ -onsent or meeting of the minds, that is, 'onsent to transfer ownershi in
e3'hange for the ri'e2
b$ ,eterminate subje't matter2 and
'$ /ri'e 'ertain in money or its eDui1alent.

Ender this definition, a -ontra't to .ell may not be 'onsidered as a -ontra't of .ale
be'ause the first essential element is la'Fing. 8n a 'ontra't to sell, the rose'ti1e seller
e3li'itly reser1es the transfer of title to the rose'ti1e buyer, meaning, the rose'ti1e
seller does not as yet agree or 'onsent to transfer ownershi of the roerty subje't of the
'ontra't to sell until the haening of an e1ent, whi'h for resent uroses we shall taFe as
the full ayment of the ur'hase ri'e. What the seller agrees or obliges himself to do is to
fulfill his romise to sell the subje't roerty when the entire amount of the ur'hase ri'e is
deli1ered to him. 8n other words, the full ayment of the ur'hase ri'e artaFes of a
susensi1e 'ondition, the nonAfulfillment of whi'h re1ents the obligation to sell from arising
and, thus, ownershi is retained by the rose'ti1e seller without further remedies by the
rose'ti1e buyer.

8586 Memorandum for Respondent, id. at 34<.
A5A6 M.R. o. +7+3+A, ovember ,<, ,--4, 7-< SCRA 33;, 3;A-3<3.

333 333 333

.tated ositi1ely, uon the fulfillment of the susensi1e 'ondition whi'h is the full
ayment of the ur'hase ri'e, the rose'ti1e seller:s obligation to sell the subje't roerty
by entering into a 'ontra't of sale with the rose'ti1e buyer be'omes demandable as
ro1ided in Arti'le 14@+ of the -i1il -ode whi'h states:

Art. 14@+. A romise to buy and sell a determinate thing for a ri'e 'ertain is
re'iro'ally demandable.

An a''eted unilateral romise to buy or to sell a determinate thing for a ri'e 'ertain
is binding uon the romissor if the romise is suorted by a 'onsideration distin't from the
ri'e.

A 'ontra't to sell may thus be defined as a bilateral 'ontra't whereby the rose'ti1e
seller, while e3ressly reser1ing the ownershi of the subje't roerty desite deli1ery thereof
to the rose'ti1e buyer, binds himself to sell the said roerty e3'lusi1ely to the rose'ti1e
buyer uon fulfillment of the 'ondition agreed uon, that is, full ayment of the ur'hase
ri'e.

A 'ontra't to sell as defined hereinabo1e, may not e1en be 'onsidered as a 'onditional
'ontra't of sale where the seller may liFewise reser1e title to the roerty subje't of the sale
until the fulfillment of a susensi1e 'ondition, be'ause in a 'onditional 'ontra't of sale, the
first element of 'onsent is resent, although it is 'onditioned uon the haening of a
'ontingent e1ent whi'h may or may not o''ur. 8f the susensi1e 'ondition is not fulfilled, the
erfe'tion of the 'ontra't of sale is 'omletely abated. Howe1er, if the susensi1e 'ondition is
fulfilled, the 'ontra't of sale is thereby erfe'ted, su'h that if there had already been re1ious
deli1ery of the roerty subje't of the sale to the buyer, ownershi thereto automati'ally
transfers to the buyer by oeration of law without any further a't ha1ing to be erformed by
the seller.

8n a 'ontra't to sell, uon the fulfillment of the susensi1e 'ondition whi'h is the full
ayment of the ur'hase ri'e, ownershi will not automati'ally transfer to the buyer
although the roerty may ha1e been re1iously deli1ered to him. 6he rose'ti1e seller still
has to 'on1ey title to the rose'ti1e buyer by entering into a 'ontra't of absolute sale.

Further, -hua 1. -ourt of Aeals, 'ited this distin'tion between a 'ontra't of sale and
a 'ontra't to sell:

8n a 'ontra't of sale, the title to the roerty asses to the 1endee uon
the deli1ery of the thing sold2 in a 'ontra't to sell, ownershi is, by agreement,
reser1ed in the 1endor and is not to ass to the 1endee until full ayment of the
ur'hase ri'e. Otherwise stated, in a 'ontra't of sale, the 1endor loses
ownershi o1er the roerty and 'annot re'o1er it until and unless the 'ontra't
is resol1ed or res'inded2 whereas, in a 'ontra't to sell, title is retained by the
1endor until full ayment of the ri'e. 8n the latter 'ontra't, ayment of the
ri'e is a ositi1e susensi1e 'ondition, failure of whi'h is not a brea'h but an
e1ent that re1ents the obligation of the 1endor to 'on1ey title from be'oming
effe'ti1e.

8t is not the title of the 'ontra't, but its e3ress terms or stiulations that determine
the Find of 'ontra't entered into by the arties. 8n this 'ase, the 'ontra't entitled G,eed of
-onditional .aleH is a'tually a 'ontra't to sell. 6he 'ontra't stiulated that Gas soon as the
full 'onsideration of the sale has been aid by the 1endee, the 'orresonding transfer
do'uments shall be e3e'uted by the 1endor to the 1endee for the ortion sold.H Where the
1endor romises to e3e'ute a deed of absolute sale uon the 'omletion by the 1endee of the
ayment of the ri'e, the 'ontra't is only a 'ontra't to sell.H 6he afore'ited stiulation shows
that the 1endors reser1ed title to the subje't roerty until full ayment of the ur'hase ri'e.

333

Enfortunately for the .ouses /a'son, sin'e the ,eed of -onditional .ale e3e'uted in
their fa1or was merely a 'ontra't to sell, the obligation of the seller to sell be'omes
demandable only uon the haening of the susensi1e 'ondition. 6he full ayment of the
ur'hase ri'e is the ositi1e susensi1e 'ondition, the failure of whi'h is no a brea'h of
'ontra't, but simly ?n e@en )? p#e@ened )e oA%&'?&on o( )e @endo# o Bon@eC &%e (#oD
?BE$&#&n' A&nd&n' (o#Be. 6hus, for its nonAfulfilment, there is no 'ontra't to seaF of, the
obligor ha1ing failed to erform the susensi1e 'ondition whi'h enfor'es a juridi'al relation.
With this 'ir'umstan'e, there 'an be no #esB&ss&on or fulfillment of an obligation that is still
nonAe3istent, the susensi1e 'ondition not ha1ing o''urred as yet. Emhasis should be made
that )e A#e?B) BoneDp%?ed &n A#&B%e 1181 o( )e Ne" C&@&% Code &s )e oA%&'o#!s (?&%$#e o
BoDp%C "&) ?n oA%&'?&on ?%#e?dC eF?n, no ? (?&%$#e o( ? Bond&&on o #ende# A&nd&n' )?
oA%&'?&on. 5Emhases and unders'oring sulied<


Consistentl2, the Court handed do0n a similar rulin) in the ,-+- case of $eirs o% Atien&a v. 'spidol,
4
546
0here it 0as 0ritten:

Re'?#d&n' )e #&') o B?nBe% )e Bon#?B (o# non3p?CDen o( ?n &ns?%%Den, )e#e &s
need o &n&&?%%C dee#D&ne &( ")? )e p?#&es )?d "?s ? Bon#?B o( s?%e o# ? Bon#?B o se%%. 8n a
'ontra't of sale, the title to the roerty asses to the buyer uon the deli1ery of the thing
sold. 8n a 'ontra't to sell, on the other hand, the ownershi is, by agreement, retained by the
seller and is not to ass to the 1endee until full ayment of the ur'hase ri'e. 8n the 'ontra't
of sale, the buyer:s nonAayment of the ri'e is a negati1e resolutory 'ondition2 in the
'ontra't to sell, the buyer:s full ayment of the ri'e is a ositi1e susensi1e 'ondition to the
'oming into effe't of the agreement. 8n the first 'ase, the seller has lost and 'annot re'o1er
the ownershi of the roerty unless he taFes a'tion to set aside the 'ontra't of sale. 8n the
se'ond 'ase, the title simly remains in the seller if the buyer does not 'omly with the
'ondition re'edent of maFing ayment at the time se'ified in the 'ontra't. Here, it is Duite
e1ident that the 'ontra't in1ol1ed was one of a 'ontra't to sell sin'e the Atien?as, as sellers,
were to retain title of ownershi to the land until resondent Esidol, the buyer, has aid the
agreed ri'e. 8ndeed, there seems no Duestion that the arties understood this to be the 'ase.

Admittedly, Esidol was unable to ay the se'ond installment of /1,@&#,###.## that
fell due in ,e'ember (##(. 6hat ayment, said both the R6- and the -A, was a ositi1e
susensi1e 'ondition failure of whi'h was no regarded a brea'h in the sense that )e#e B?n Ae
no #esB&ss&on o( ?n oA%&'?&on 4o $#n o@e# &%e6 )? d&d no Ce eF&s s&nBe )e s$spens&@e
Bond&&on )?d no ?Gen p%?Be . 3 3 3. ;Emhases and unders'oring sulied<

%hus, the Court full2 a)rees 0ith the CA 0hen it resolved: JConsiderin), ho0ever, that the 'eed of
Conditional Sale 0as not cancelled b2 9endor Re2es FpetitionerG and that out of the total purchase price of the sub/ect
propert2 in the amount of ;,,--,---.--, the remainin) unpaid balance of %uparan FrespondentG is onl2 A-<,---.--,
a substantial amount of the purchase price has alread2 been paid. It is onl2 ri)ht and /ust to allo0 %uparan to pa2 the
said unpaid balance of the purchase price to Re2es.K
+-
5+-6

4546 M.R. o. +A-77<, Au)ust ++, ,-+-, 7,A SCRA ,<7, ,7,-,73.
+-5+-6 CA 'ecision, rollo, p. +--.
Mrantin) that a rescission can be permitted under Article ++4+, the Court still cannot allo0 it for the reason
that, considerin) the circumstances, there 0as onl2 a sli)ht or casual breach in the fulfillment of the obli)ation.

"nless the parties stipulated it, rescission is allo0ed onl2 0hen the breach of the contract is substantial and
fundamental to the fulfillment of the obli)ation. Lhether the breach is sli)ht or substantial is lar)el2 determined b2
the attendant circumstances.
++
5++6 In the case at bench, the sub/ect contract stipulated the follo0in) important
provisions:


,. %hat the purchase price of ;,,--,---.-- shall be paid as follo0s:

aG ,8A,-8A.+3 received in cash b2 the 1irst Part2 but directl2 paid to the %hird Part2 as partial
pa2ment of the mort)a)e obli)ation of the 1irst Part2 in order to reduce the amount to ,,---,---.--
onl2 as of ovember +<, +44-?

bG 8,+,4,+.A8 received in cash b2 the 1irst Part2 as additional pa2ment of the Second Part2?

cG +,,--,---.-- to be paid in installments as follo0s:

+. ,--,---.-- pa2able on or before *anuar2 3+, +44+?
,. ,--,---.-- pa2able on or before *une 3-, +44+?
3. A--,---.-- pa2able on or before 'ecember 3+, +44+?

ote: All the installments shall not bear an2 interest.

dG ,,---,---.-- outstandin) balance of the mort)a)e obli)ation as of ovember +<,
+44- 0hich is hereb2 assumed b2 the Second Part2.

H H H

3. %hat the %hird Part2 hereb2 ac@no0led)es receipts from the Second Part2 P,8A,-8A.+3 as
partial pa2ment of the loan obli)ation of 1irst Part2 in order to reduce the account to onl2
,,---,---.-- as of ovember +<, +44- to be assumed b2 the Second Part2 effective ovember +<,
+44-.
+,
5+,6

1rom the records, it cannot be denied that respondent paid to 1S$ &an@ petitionerBs mort)a)e obli)ation in the
amount of ,,,8A,-8A.+3, 0hich formed part of the purchase price of the sub/ect propert2. $i@e0ise, it is not disputed
that respondent paid directl2 to petitioner the amount of 8,+,4,+.A8 representin) the additional pa2ment for the
purchase of the sub/ect propert2. Clearl2, out of the total price of ;,,--,---.--, respondent 0as able to pa2 the total
amount of 3,---,---.--, leavin) a balance of +,,--,---.-- pa2able in three F3G installments.

Out of the +,,--,---.-- remainin) balance, respondent paid on several dates the first and second
installments of ,--,---.-- each. She, ho0ever, failed to pa2 the third and last installment of A--,---.-- due on
'ecember 3+, +44+. evertheless, on Au)ust 3+, +44,, respondent, throu)h counsel, offered to pa2 the amount of
8<+,---.--, 0hich 0as re/ected b2 petitioner for the reason that the actual balance 0as A-<,---.-- eHcludin) the
interest char)es.

Considerin) that out of the total purchase price of ;,,--,---.--, respondent has alread2 paid the substantial
amount of 3,;--,---.--, more or less, leavin) an unpaid balance of onl2 A-<,---.--, it is ri)ht and /ust to allo0
++5++6 (( Sports)ear *%+. Corp. v. ,orld Class "roperties, -n#., M.R. o. +A,8,-, March ,, ,-+-, 7+; SCRA 8<,
A8.
+,5+,6 Rollo, pp. ,<-,7.
her to settle, 0ithin a reasonable period of time, the balance of the unpaid purchase price. %he Court a)rees 0ith the
courts belo0 that the respondent sho0ed her sincerit2 and 0illin)ness to compl2 0ith her obli)ation 0hen she offered
to pa2 the petitioner the amount of 8<+,---.--.

On the issue of interest, petitioner failed to substantiate her claim that respondent made a personal
commitment to pa2 a 7D monthl2 interest on the A-<,---.-- from the date of delin=uenc2, 'ecember 3+, +44+. As
can be )leaned from the contract, there 0as a stipulation statin) that: JAll the installments shall not bear interest.K %he
CA 0as, ho0ever, correct in imposin) interest at the rate of 7D per annum startin) from the filin) of the complaint on
September ++, +44,.





1inall2, the Court upholds the rulin) of the courts belo0 re)ardin) the non-imposition of dama)es and
attorne2Bs fees. Aside from petitionerBs self-servin) statements, there is not enou)h evidence on record to prove that
respondent acted fraudulentl2 and maliciousl2 a)ainst the petitioner. In the case of $eirs o% Atien&a v. 'spidol,
+3
5+36 it
0as stated:

Resondents are not entitled to moral damages be'ause 'ontra'ts are not referred to in
Arti'le ((1+ of the -i1il -ode, whi'h enumerates the 'ases when moral damages may be
re'o1ered. Arti'le (((# of the -i1il -ode allows the re'o1ery of moral damages in brea'hes of
'ontra't where the defendant a'ted fraudulently or in bad faith. Howe1er, this 'ase in1ol1es a
'ontra't to sell, wherein full ayment of the ur'hase ri'e is a ositi1e susensi1e 'ondition,
the nonAfulfillment of whi'h is not a brea'h of 'ontra't, but merely an e1ent that re1ents the
seller from 'on1eying title to the ur'haser. .in'e there is no brea'h of 'ontra't in this 'ase,
resondents are not entitled to moral damages.


8n the absen'e of moral, temerate, liDuidated or 'omensatory damages, e3emlary
damages 'annot be granted for they are allowed only in addition to any of the four Finds of
damages mentioned.


-+ERE*ORE, the petition is DENIED.

SO ORDERED.






.OSE CATRAL MENDO>A
Associate *ustice






+35+36 Supra note 4.


L# COC"R:



ANTONIO T. CARPIO
Associate *ustice
Chairperson





ANTONIO EDUARDO ,. NAC+URA DIOSDADO M. PERALTA
Associate *ustice Associate *ustice




RO,ERTO A. A,AD
Associate *ustice

A T T E S T A T I O N

I attest that the conclusions in the above 'ecision had been reached in consultation before the case 0as
assi)ned to the 0riter of the opinion of the CourtBs 'ivision.




ANTONIO T. CARPIO
Associate *ustice
Chairperson, Second 'ivision


C E R T I * I C A T I O N

Pursuant to Section +3, Article 9III of the Constitution and the 'ivision ChairpersonBs Attestation, I certif2
that the conclusions in the above 'ecision had been reached in consultation before the case 0as assi)ned to the 0riter
of the opinion of the CourtBs 'ivision.


RENATO C. CORONA
Chief *ustice